China's retail trading revival and steady policy injections are reshaping market dynamics even as geopolitical moves over critical minerals add new layers of risk. In January A shares saw a staggering jump in new brokerage accounts, with 4.9158 million new openings, a 213 percent year on year increase and an 89 percent rise from December. The surge was almost entirely driven by individual investors, who opened 4.9053 million accounts, lifting January to near the highest monthly inflows of the last decade and signaling renewed household appetite for equities.
Beijing's central bank moved at the short end to keep markets well supplied with cash. The People’s Bank of China will conduct 800 billion yuan of three month buyout reverse repos on February 4, replacing roughly 700 billion yuan of maturing operations and producing a modest net injection of 100 billion yuan. Policymakers and market participants framed the action as a routine step to smooth seasonal liquidity stresses ahead of the Lunar New Year and a signal that authorities remain prepared to support stable financial conditions.
Outside China, two developments captured attention. In Washington, the US announced a strategic reserve program for critical minerals with $10 billion of seed funding from the Export-Import Bank, a move intended to reduce reliance on Chinese rare earths and other inputs. Beijing responded by calling for constructive efforts to preserve global supply chain stability. At the same time Japan reported progress in extracting rare earth rich mud, underscoring intensifying competition over mining and processing capacity.
Global equities offered a mixed picture. On February 3 US indices closed lower while Walmart briefly breached a $1 trillion market capitalisation intraday, setting a new cycle high for the retail giant even as major technology names retreated. Domestically in China, positive momentum showed up across sectors, with renewed interest in gold after recent price swings and an uptick in foot traffic at Shenzhen's gold market.
Policy and property initiatives also featured in the domestic agenda. Shanghai launched a pilot program to acquire second hand housing for affordable rental projects, prioritising small units in central districts to support talent retention and improve job housing balance. Meanwhile, rumours of big increases to VAT rates for games and certain internet services were publicly dismissed by experts and authorities, who pointed to the recently implemented VAT law as providing clarity on tax treatment.
For investors the combination of retail inflows, measured liquidity support and a political backdrop focused on strategic supply chains creates a complex environment. Retail participation can buoy turnover and raise valuations but also increase sensitivity to sentiment and news. The PBOC's choice of short tenor operations suggests a preference for targeted, temporary easing rather than broad loosening, keeping policy room for maneuver if markets wobble.
Looking ahead, watch three fault lines. First, whether retail demand translates into sustained fund flows or simply amplifies swings during volatile episodes. Second, how quickly supply chain diversification efforts for critical minerals translate into real world capacity versus stirring geopolitical frictions. Third, whether modest liquidity injections will be sufficient if global shocks deepen, in which case authorities could be forced to shift from fine tuning to more substantive stimulus.
This developing combination of strong household interest in equities, cautious central bank support and growing strategic competition over raw materials points to a market environment that is more active and more politicised. Investors should expect higher volumes and faster-moving narratives, and policymakers will be balancing market stability, housing outcomes and industrial resilience as 2026 unfolds.